According to The Wall Street Journal, the SEC is coming to help private equity, venture capital, and hedge fund investors.
As Reagan is quoted as saying: “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.’”
All joking aside, many in the industry would argue that greater SEC oversight is unnecessary. However, what cannot be argued is that private markets — as defined by private equity, venture capital, and hedge funds — have grown over the last two decades to dominate the investment markets.
From the article: “(SEC Chair) Gensler said in a recent speech that private funds’ gross assets recently surpassed those of the commercial banking sector at more than $25 trillion. That is up from $9 trillion in 2012, according to SEC data. Some policy makers have grown alarmed at the burgeoning size of the lightly regulated sector. They worry that private funds could pose risks to financial stability and to pension beneficiaries such as teachers and firefighters.”
That is an almost three-fold asset increase in just ten years. The industry may not like the increased scrutiny of the SEC. But given that the sector has now surpassed the commercial banking sector, it would be naive not to expect more regulatory oversight.
If you are a general partner of a private equity fund, venture capital fund, or hedge fund — you need to take notice of this and act now.
Having the appropriate compliance and fund governance infrastructure in place will now be one of the most important aspects of your fund that institutional investors will scrutinize.
Unfortunately, most funds do not have the internal expertise or budget for a full-time role to handle these important issues. That is why you need to engage an outsourced expert with the deep expertise in these areas. That is what E78 Partners was created to do.
© Copyright August 2023. Marc Patterson. All Rights Reserved.